Shopping for a home in Santa Monica and wondering if your mortgage will be conforming or jumbo? You’re not alone. With local prices and lender rules, it can be hard to know where your loan will land. In this guide, you’ll learn the key differences, the current thresholds that matter in Los Angeles County, and how your down payment can switch you from conforming to jumbo. Let’s dive in.
Conforming vs. jumbo: quick definitions
Conforming loan. A mortgage that meets the Federal Housing Finance Agency (FHFA) rules so it can be bought by Fannie Mae or Freddie Mac. These loans follow standardized guidelines for credit, debt-to-income, and documentation.
Jumbo loan. Any mortgage amount above the FHFA conforming limit for your county and property type. Jumbos are funded by banks or specialty lenders with guidelines that can be stricter and more varied than conforming loans.
The 2024 threshold for Santa Monica
Los Angeles County, which includes Santa Monica, is historically a high‑cost area for conforming loans. As a baseline reference for 2024, the single‑family (1‑unit) high‑cost conforming limit is $1,149,825. If your loan amount is at or below that figure, it’s typically conforming. Anything above it is jumbo.
- Always confirm the current FHFA limits before you lock a plan. Limits update annually.
- Multi‑unit properties have higher conforming limits. If you’re buying 2–4 units, check the FHFA table for the unit‑specific number.
- FHA and VA programs have different rules and limits. Review those with a lender if you plan to use those programs.
How down payment changes loan type
Your loan amount equals purchase price minus down payment. That single calculation determines whether you’re under the conforming cap or in jumbo territory.
Here are simple examples using the 2024 1‑unit high‑cost limit of $1,149,825:
Example A: $900,000 condo or small home
- 20% down ($180,000) → loan $720,000 → conforming.
- 5% down ($45,000) → loan $855,000 → conforming (PMI likely).
Takeaway: Many homes below about $1.15M can fit into conforming with reasonable down payments.
Example B: $1,300,000 single‑family
- 20% down ($260,000) → loan $1,040,000 → conforming.
- 10% down ($130,000) → loan $1,170,000 → jumbo.
Takeaway: For prices just above the cap, a larger down payment can keep you conforming. Smaller down payments may push you into jumbo.
Example C: $2,500,000 higher‑end property
- 20% down ($500,000) → loan $2,000,000 → jumbo.
- 30% down ($750,000) → loan $1,750,000 → jumbo.
Takeaway: Most buyers at higher price points will need jumbo financing and should prepare for stricter requirements.
Example D: Multi‑unit purchase
- Conforming limits rise for 2–4 units. Depending on the unit count and your down payment, you may still qualify for conforming. Verify the unit‑specific FHFA limit.
What changes with jumbo underwriting
Down payment and LTV
- Conforming often allows low down payments (as low as 3–5% with certain programs), though many buyers choose 10–20% down. PMI usually applies above 80% LTV.
- Jumbo commonly requires larger down payments, often 10–20% minimum, with 20%+ preferred for best pricing.
Rates and pricing
- Jumbo rates can be higher than conforming, but the gap varies by lender, market, credit, and LTV. Sometimes strong jumbo borrowers receive rates comparable to conforming.
Credit score and debt ratios
- Jumbo typically favors higher credit scores (often 700+ and many lenders want 720–740 for top tiers).
- Conforming may allow higher debt‑to‑income ratios with compensating factors. Jumbo often caps DTI closer to 43–45% for stronger pricing.
Reserves and assets
- Jumbo loans usually require more cash reserves, often 6–12 months or more of total housing payments.
- Conforming generally requires fewer reserves.
Documentation and income validation
- Expect standard income and asset verification for both, with more conservative review for jumbo. Self‑employed borrowers may need two years of returns and additional business documentation.
- Non‑QM and bank‑statement jumbo options exist but often come with higher rates and stricter reserve needs.
Mortgage insurance and second liens
- Conforming over 80% LTV usually needs PMI.
- Jumbo rarely uses PMI. Some buyers use an 80/10/10 second‑lien structure to avoid it, depending on lender offerings.
Appraisals and property review
- In high‑value coastal areas like Santa Monica, jumbo loans may require enhanced appraisal scrutiny, sometimes a second appraisal or a detailed review.
Lender overlays
- Jumbo rules vary widely by lender. Shopping options matters because overlays, reserve rules, and pricing differ.
How to prepare as a Santa Monica buyer
Getting organized early helps you move quickly and reduces surprises.
Documents to gather:
- 2 years federal tax returns (personal and business if self‑employed)
- Recent pay stubs and W‑2s, or income verification
- Bank and investment statements for the last 2–3 months
- Documentation for large deposits or gifts
- Letters of explanation for employment gaps or credit anomalies
- Business documents (K‑1s, 1099s, P&L) if applicable
- Trust or LLC documents if you plan to hold title in an entity
Financial steps to take:
- Review your credit and correct errors before applying.
- Choose a target down payment based on whether you want conforming or are comfortable with jumbo criteria.
- Build liquid reserves. Jumbos often require more months of payments on hand.
- Avoid large unexplained cash deposits for 60–90 days before you apply.
- Get preapproved with a lender experienced in jumbo loans in Los Angeles County.
Lender and timing tips
- Prioritize lenders with Westside experience. They understand local comps and appraisal dynamics.
- Compare full loan estimates: rate, fees, required reserves, and lock options.
- Plan for appraisals. Unique or higher‑value homes can take longer to evaluate.
- Discuss lock strategies. Jumbo pricing can move with markets, so confirm lock windows and any float‑down features.
Next steps
If your target price is near the conforming cap, your down payment choice may decide whether you go conforming or jumbo. For higher‑end properties, plan for jumbo guidelines and build a strong asset and documentation story.
If you want a clear read on where your scenario lands, schedule a private consultation with Shelton Wilder. We’ll help you run the numbers, align your financing approach with your goals, and connect you with lender options that fit Santa Monica’s market.
FAQs
What is the 2024 conforming loan limit in Los Angeles County?
- For a 1‑unit property, the 2024 high‑cost conforming limit is $1,149,825; verify current FHFA limits because they update annually.
How can I keep my $1.3M Santa Monica purchase conforming?
- Put at least 20% down so the loan amount is about $1,040,000, which is below the 2024 conforming cap.
Do jumbo loans always have higher rates than conforming?
- Not always; the spread changes with market conditions and borrower profile, and some strong jumbo borrowers receive comparable pricing.
What documents do lenders usually require for jumbo loans?
- Expect full income and asset verification, larger reserve documentation, and more detailed review of non‑traditional income or large deposits.
Are loan limits different for multi‑unit properties in Santa Monica?
- Yes; conforming limits increase for 2–4 units, so verify the unit‑specific FHFA number to see if you still qualify for conforming.
